What can happen with China in 2016?
The forecast of the consulting company “McKinsey & Company” on the development of China's economy
China's economy is made up of several macro-regions, which produce products for more than 1 trillion US dollars. In recent years, some of these macro-regions are on the rise, while others experience a small decline. These differences in growth directly impact the competitiveness of regions. And for a more detailed study of China's macro-regions, we must analyze regions separately, but it is still possible to identify some common features for the entire Chinese economy.
The target growth rate of China's GDP for 2016 remains at the same level - 6%, which maybe subsequently reduced. Reduced economic growth, according to China's plans, will not affect the rest of the important directions of development of the country as the preservation of the environment, health and incomes of the population, etc. At the same time, achievement of the goal of growth will continue to be the main goal of fiscal and monetary policy, so there are forecasts about low interest rates and pressure on the exchange rate against the US dollar.
China will make further efforts to reduce harmful emissions into the atmosphere (the tightening of standards and increased of expenditures on support of alternative energy). At the end of 2015, China has done a lot of work to increase the capacity in renewable energy, and in 2016 are possible exports of Chinese cleaning filters abroad, particularly to India, which has a similar problem.
An important area of the Plan is an increase of productivity. This implies retraining of the workforce from disappearing, traditional sectors of the economy, the increased level of labor mobility and introduction of the system of life-long learning of human capital.
According to official Chinese sources, in 2015 China's employment in the construction sector decreased by 15 million jobs, in the mining sector by several million. The growing service sector is a good alternative for liberated labor. The only problem for transition is the process of retraining.
Focus on productivity and reallocation of jobs can lead to a decrease in the rate of income growth, and at the same time to the volatility of the consumer confidence. Given that the share of consumer spending in GDP is about 50%, and the effects of last year's resonant events at the stock market of China, the policy of the country in relation to the human capital will be cautious.
In 2016 imports of agricultural products reached a record, both in value and in physical terms. A large number of countries see in this regard the export potential. During the first 9 months of 2015 Russia exported to China about 500 thousand tons of grain, while during the entire 2014, the figure was only 100 thousand tons of grain. The supply of meat from Argentina and Australia is also planned in the nearest future. American farmers are well represented on the Chinese market. The main US supplies are: soy, cereals and food industry. At the same time, US farmers are accented on the middle-class consumers with a tool of Internet sales, that is, using direct contact with the consumer.
Even with China's huge investment in internal infrastructure, it has not solved the problem. The main reason is the rapid growth of urban population and its needs. For example, according to official figures, Beijing's population has grown by 60% over the past 14 years, reaching 21 million. In this direction will be carried out further policies to increase labor mobility. Beijing and other major cities of China will strive to relocate people from the city centers to the suburbs and peripheral areas.
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